Dakota Plains Holdings, Inc. Reports Second Quarter 2013 Financial Results Operations Remain Competitive Despite Collapsed Pricing Spread

Pioneer Terminal Expansion On Schedule For Year-End 2013 Completion

Paradigm Midstream Announces Pipeline To Pioneer Terminal

UNIMIN Deal Launches Inbound Commodity Services

WAYZATA, Minn., Aug. 8, 2013 /PRNewswire/ -- Dakota Plains Holdings, Inc. ("Dakota Plains" and "DAKP"), (OTC: DAKP), today announced financial results for the three and six months ended June 30, 2013. 

Second Quarter 2013 Operational and Financial Highlights

  • Net loss was $(0.6) million compared to net income of $0.6 million sequentially and $3.4 million for the same period in 2012.
  • Adjusted EBITDA was $1.5 million compared to $2.4 million sequentially and $6.3 million for the same period in 2012.
  • JV transloading volumes of 2.3 million barrels of oil were down slightly from 2.4 million barrels sequentially and up 27% from 1.8 million barrels for the same period in 2012.
  • JV marketing volumes sold of 2.6 million barrels of oil were flat sequentially and increased 34% from 1.9 million barrels in the same period in 2012.
  • JV trucking volumes, which commenced in the third quarter of 2012, were 1.3 million barrels of oil up from 1.1 million barrels sequentially.
  • The Pioneer Terminal expansion commenced on March 25 and is on schedule to increase throughput capacity to 80,000 barrels per day by year-end 2013.
  • Paradigm Midstream announced a new 70 mile pipeline with up to 120,000 barrels per day of takeaway capacity that will connect McKenzie and Dunn Counties, ND, to the Pioneer Terminal in 2014.
  • Executed new credit facility to finance Dakota Plains' $25 million share of the Pioneer Terminal expansion.
  • Subsequent to the second quarter, announced agreement with UNIMIN to operate a 750,000 ton per year frac sand terminal to be constructed by UNIMIN at the Pioneer Terminal.
  • Restricted cash totals $28.5 million, a portion of which will be utilized for funding of the Pioneer Terminal expansion.

Chairman and Chief Executive Officer, Craig McKenzie, said, "Despite macro-economic conditions that resulted in a collapsed spread between Brent and WTI oil pricing, we continue to grow the company efficiently.  We were very pleased to work with Paradigm Midstream and jointly announce the planned construction of a new crude oil pipeline to the Pioneer Terminal.  We secured financing for the Pioneer Terminal expansion, increased our fleet of trucks from 14 to 22, negotiated our first inbound commodity supply business with UNIMIN, and equally as important we demonstrated the strength of our location during a highly competitive period."

Mr. McKenzie continued, "The volumes available to rail were down substantially by the end of the second quarter.  During the second quarter, DAKP's volumes were resilient and resulted in an improved market share as we remained competitive with our low cost structure and vertical integration.  We believe the longer term outlook for crude production growth in the Williston Basin and the continued reliance on transport by rail underpin our strategy to grow and fully build out the Pioneer Terminal." 

Second Quarter 2013 Financial Results
The Company reported a net loss of $(0.6) million for the three months ended June 30, 2013, compared to net income of $3.4 million for the three months ended June 30, 2012. The net loss for the second quarter was driven by a significant decrease in margins experienced within our marketing joint venture primarily as a result of the narrowing of the price spread between Brent and WTI.  General and administrative expenses were $2.5 million for the three months ended June 30, 2013, compared to $0.6 million for the three months ended June 30, 2012.  The increase was mostly due to the recognition of share-based compensation to the board of directors and new employees.  Of the $2.5 million expense, non-cash and one-time provisions represent approximately $1.6 million

Income from the Company's investment in the transloading joint venture was $1.4 million for the three months ended June 30, 2013, compared to $1.0 million for the three months ended June 30, 2012. The total volume transloaded by the transloading joint venture increased 27% to 2.3 million barrels of oil compared to 1.8 million barrels of oil for the three months ended June 30, 2012. Income from the Company's investment in the marketing joint venture was $0.9 million for the three months ended June 30, 2013, compared to $5.7 million for the three months ended June 30, 2012. The decrease primarily was due to a decline in marketing margins for the quarter.  The total number of barrels sold by the marketing joint venture increased 34% to 2.6 million barrels of oil, compared to 1.9 million barrels of oil for the three months ended June 30, 2012.  Income from the Company's investment in the trucking joint venture was $136,000 for the three months ended June 30, 2013, during which time the joint venture hauled 1.3 million barrels of oil. The trucking joint venture increased its fleet of trucks from 14 to 22 for the three months ended June 30, 2013, in preparation for trucking for third parties to destinations other than New Town, North Dakota. The trucking joint venture was not operational during the second quarter of 2012.

The Company recognized rental income of $100,000 for the three months ended June 30, 2013, compared to $78,000 for the three months ended June 30, 2012. The increase in rental income was due to the June 2012 and January 2013 renegotiations of the lease agreement to reflect the additional acreage added to the Pioneer Terminal.

Adjusted EBITDA for the second quarter ended June 30, 2013 was $1.5 million compared to $6.3 million for the second quarter of 2012. 

Restricted and free cash was $29.5 million at the end of June 30, 2013.

Year-to-Date 2013 Financial Results
Net loss for the six months ended June 30, 2013 was $5,000, or $0.00 per diluted share compared to a net loss of $12.5 million, or $(0.32) per diluted share in the same period of 2012, which was primarily due to interest expense recorded in the first half of 2012 related to the additional payment provision of the derivative liability equal to $28.3 million, recorded in the first half of 2012. The net loss for the six months year-to-date of 2013 was primarily the result of the decrease in margins within our marketing joint venture, as well as increases in our non-cash and one-time general and administrative expenses. Transloading income increased 35% to $2.8 million from $2.1 million during the same period last year. Trucking income was $198,000 with no comparable period in 2012 since this joint venture commenced in September 2012. Marketing income decreased to $2.7 million from $7.6 million last year, due to a decrease in margins in the joint venture as a result of the significant narrowing of the price spread between Brent and WTI experienced in the second quarter. Adjusted EBITDA for the six months ended June 30, 2013 was $3.9 million compared to $8.6 million for the same period in 2012. The decrease was primarily due to the decrease in the income from our investments in our marketing joint venture which occurred in the second quarter of 2013.

Adjusted EBITDA
Adjusted EBITDA is a non-GAAP measure. A reconciliation of this measure to its most directly comparable GAAP measure is included in the accompanying financial tables found later in this release. Management believes the use of this non-GAAP financial measure provides useful information to investors to gain an overall understanding of current financial performance. Specifically, management believes the non-GAAP results included herein provide useful information to both management and investors by excluding certain expenses and gains and losses on the extinguishment of debt that management believes are not indicative of Dakota Plains' core operating results. In addition, this non-GAAP financial measure is used by management for budgeting and forecasting as well as subsequently measuring Dakota Plains' performance, and management believes it is providing investors with a financial measure that most closely aligns to its internal measurement processes.

About Dakota Plains Holdings, Inc.
Dakota Plains Holdings, Inc. ("Dakota Plains") (OTC: DAKP) is an integrated midstream energy company, which competes through its 50/50 joint ventures to provide customers with crude oil off take services that include marketing, transloading and trucking of crude oil and related products.  Direct and indirect company assets include a proprietary trucking fleet, a transloading facility located in Mountrail County, North Dakota, which is centrally located within the Bakken formation, and over 1,000 railroad tank cars.

Dakota Plains is uniquely positioned to exploit crude oil 'export' opportunities within the Williston Basin of North Dakota and Montana, which is the largest onshore oil production source in North America, where the lack of available pipeline capacity provides a long-term and increasing surplus of crude oil available for core business of the company.

Cautionary Note Regarding Forward Looking Statements
This announcement contains forward-looking statements that reflect the current views of Dakota Plains, including, but not limited to, statements regarding our future growth and plans for our business and operations.  We do not undertake to update our forward-looking statements.  These statements involve risks and uncertainties.  Our actual results could differ materially from those anticipated in these forward-looking statements as a result of lack of diversification, dependency upon strategic relationships, dependency on a limited number of major customers, competition for the loading, marketing and transporting of crude oil and related products, difficulty in obtaining additional capital that will be needed to implement business plans, difficulties in attracting and retaining talented personnel, risks associated with building and operating a transloading facility, changes in commodity prices and the demand for crude oil and natural gas, competition from other energy sources, inability to obtain necessary facilities, difficulty in obtaining crude oil to transport, increases in our operating expenses, an economic downturn or change in government policy that negatively impacts demand for our services, penalties we may incur, costs imposed by environmental laws and regulations, inability to obtain or maintain necessary licenses, challenges to our properties, technological unavailability or obsolescence, and future acts of terrorism or war, as well as the threat of war and other factors described from time to time in the company's reports filed with the U.S. Securities and Exchange Commission, including our annual report on Form 10-K, filed March 14, 2013, as may be amended and supplemented by subsequent reports from time to time.

For more information, please contact:



Company Contact

Investor Contact

Tim Brady, CFO

Peter Seltzberg, Hayden IR

tbrady@dakotaplains.com

peter@haydenir.com

Phone: 952.473.9950

Phone: 646.415.8972

www.dakotaplains.com

www.haydenir.com

 



 


 DAKOTA PLAINS HOLDINGS, INC. AND SUBSIDIARIES 

 UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS 

AS OF JUNE 30, 2013 AND DECEMBER 31, 2012


 ASSETS 


 June 30, 


 December 31, 


2013


2012

 CURRENT ASSETS 





 Cash and Cash Equivalents 

$         866,956


$        2,340,083


 Accounts Receivable 

145,766


-


 Prepaid Expenses 

403,850


30,632


 Due from Related Party 

159,072


81,175


 Deferred Tax Asset 

1,266,000


1,414,000



 Total Current Assets 

2,841,644


3,865,890










 PROPERTY AND EQUIPMENT 





 Land 

3,166,849


3,166,849


 Site Development 

2,308,114


2,329,660


 Other Property and Equipment 

203,678


45,292



 Total Property and Equipment 

5,678,641


5,541,801


 Less - Accumulated Depreciation 

509,691


424,833



 Total Property and Equipment, Net 

5,168,950


5,116,968






 PREFERRED DIVIDEND RECEIVABLE 

1,065,754


819,178






 INVESTMENT IN DPTS MARKETING LLC 

21,422,111


21,905,797






 INVESTMENT IN DAKOTA PETROLEUM TRANSPORT 





 SOLUTIONS, LLC 

8,033,396


5,331,599






 INVESTMENT IN DAKOTA PLAINS SERVICES, LLC 

138,523


-






 FINANCE COSTS, NET 

160,683


184,225






 DEPOSIT 

12,500


-






 DEFERRED TAX ASSET 

1,954,000


2,441,000
















 Total Assets 

$    40,797,561


$      39,664,657






 LIABILITIES AND STOCKHOLDERS' EQUITY 

 CURRENT LIABILITIES 





 Accounts Payable 

$         310,902


$          239,674


 Accrued Expenses 

111,132


232,905


 Income Taxes Payable 

303,295


1,028,000


 Deferred Rental Income 

12,573


20,679


 Promissory Notes 

4,605,300


-



 Total Current Liabilities 

5,343,202


1,521,258



 . 



 LONG-TERM LIABILITIES 





 Promissory Notes, Net of Debt Discount 

21,184,199


25,614,683


 Other Noncurrent Liabilities 

17,500


-


 Deferred Rental Income 

157,153


165,434



 Total Long-Term Liabilities 

21,358,852


25,780,117








 Total Liabilities 

26,702,054


27,301,375






 STOCKHOLDERS' EQUITY 



 Preferred Stock - Par Value $.001; 10,000,000 Shares Authorized;  None Issued or Outstanding 





-


-


 Common Stock, Par Value $.001; 100,000,000 Shares Authorized, 42,825,577  and 41,839,433 Issued and Outstanding, Respectively 





42,825


41,839


 Additional Paid-In Capital 

19,169,048


17,432,904


 Accumulated Deficit 

(5,116,366)


(5,111,461)



 Total Stockholders' Equity 

14,095,507


12,363,282








 Total Liabilities and Stockholders' Equity 

$    40,797,561


$      39,664,657

 

 

 DAKOTA PLAINS HOLDINGS, INC. AND SUBSIDIARIES 

 UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS 

 FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2013 AND 2012 



 Three Months Ended 


 Six Months Ended 


 June 30,  


 June 30, 








2013


2012


2013


2012

 REVENUES 









 Rental Income - Related Party 

$       99,570


$        77,932


$     194,769


$        158,212










 OPERATING EXPENSES 









 General and Administrative Expenses 

2,545,452


585,083


3,989,843


1,344,535


 Depreciation and Amortization 

43,874


41,340


84,858


82,557



 Total Operating Expenses 

2,589,326


626,423


4,074,701


1,427,092











 LOSS FROM OPERATIONS 

(2,489,756)


(548,491)


(3,879,932)


(1,268,880)











 OTHER INCOME (EXPENSE) 









 Income from Investment in Dakota Petroleum Transport Solutions, LLC 

1,364,661


990,271


2,778,921


2,056,902


 Income from Investment in DPTS Marketing LLC 

906,327


5,663,837


2,672,890


7,552,564


 Income from Investment in Dakota Plains Services, LLC 

136,374


-


198,429


-


 Interest Expense (Net of Interest Income) 

(900,408)


(745,694)


(1,791,213)


(28,325,938)



 Total Other Income (Expense) 

1,506,954


5,908,414


3,859,027


(18,716,472)











 INCOME (LOSS) BEFORE  TAXES 

(982,802)


5,359,923


(20,905)


(19,985,352)










 INCOME TAX EXPENSE (BENEFIT) 

(389,000)


2,004,385


(16,000)


(7,471,015)










 NET INCOME (LOSS) 

$    (593,802)


$    3,355,538


$       (4,905)


$  (12,514,337)










 Net Income (Loss) Per Common Share – Basic 

$           (0.01)


$              0.08


$         (0.00)


$              (0.32)










 Net Income (Loss) Per Common Share – Diluted 

$           (0.01)


$              0.08


$         (0.00)


$              (0.32)










 Weighted Average Shares Outstanding - Basic 

41,854,205


40,522,712


41,637,609


38,613,702










 Weighted Average Shares Outstanding - Diluted 

41,854,205


42,259,615


41,637,609


38,613,702










 

 


 DAKOTA PLAINS HOLDINGS, INC. AND SUBSIDIARIES 

 UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS 

 FOR THE SIX MONTHS ENDED JUNE 30, 2013 AND 2012 


















Six Months Ended 








June 30,








2013


2012

 CASH FLOWS FROM OPERATING ACTIVITIES 





 Net Loss 

$        (4,905)


$    (12,514,337)


 Adjustments to Reconcile Net Loss to Net Cash 






 Used in Operating Activities 






 Depreciation and Amortization 

84,858


82,557



 Amortization of Debt Discount 

174,816


-



 Amortization of Finance Costs 

33,325


-



 Loss on Derivative Liability 

-


27,311,800



 Deferred Income Taxes 

635,000


(7,474,000)



 Share-Based Consulting Fees 

224,992


-



 Increase (Decrease) in Deferred Rental Income 

(19,052)


50,610



 Income from Investment in Dakota Petroleum Transport Solutions, LLC 

(2,778,921)


(2,056,902)



 Income from Investment in DPTS Marketing LLC 

(2,672,890)


(7,552,564)



 Income for Investment in Dakota Plains Services, LLC 

(198,429)


-



 Non-cash Rental Income 

(7,747)


(40,493)



 Amortization of Deferred Rent 

(500)


-



 Share-Based Compensation 

1,859,267


198,276



 Changes in Working Capital and Other Items: 






    Increase in Accounts Receivable 

(145,766)


-



    Increase in Prepaid Expenses 

(152,289)


(80,529)



    Increase in Due from Related Party 

(77,897)


-



    Increase in Accounts Payable 

52,561


139,063



    Decrease in Income Taxes Payable 

(724,705)


-



    Increase (Decrease) in Accrued Expenses 

(127,773)


408,508



    Decrease in Deferred Rental Income 

(8,106)


(104,485)



 Increase in Other Assets 

(12,500)


-



     Net Cash Used In Operating Activities 

(3,866,661)


(1,632,496)









 CASH FLOWS FROM INVESTING ACTIVITIES 





 Purchases of Property and Equipment 

(94,173)


(6,417)


 Cash Received from DPTS Marketing LLC 

2,910,000


-


 Cash Received from Dakota Plains Services, LLC 

59,906


-


 Cash Received from Dakota Petroleum Transport Solutions, LLC 

95,642


1,017,819



 Net Cash Provided By Investing Activities 

2,971,375


1,011,402








 CASH FLOWS FROM FINANCING ACTIVITIES 





 Finance Costs Paid 

(9,783)


-


 Repurchase of Common Stock 

(568,058)


-



 Net Cash Used In Financing Activities 

(577,841)


-








 NET DECREASE IN CASH AND CASH EQUIVALENTS 

(1,473,127)


(621,094)











 CASH AND CASH EQUIVALENTS – BEGINNING OF PERIOD 

2,340,083


1,753,665











 CASH AND CASH EQUIVALENTS – END OF PERIOD 

$      866,956


$       1,132,571











 Supplemental Disclosure of Cash Flow Information 





 Cash Paid During the Period for Interest 

$   1,583,197


$          537,050


 Cash Paid During the Period for Income Taxes 

$        73,705


$              2,985












 Non-Cash Financing and Investing Activities: 






 Purchase of Property and Equipment Paid Subsequent to Period End 

$        49,467


$            30,800



 Satisfaction of Derivative Liability with Common Stock 

$                   -


$      5,187,850



 Promissory Notes Issued to Satisfy Derivative Liability 

$                   -


$    27,663,950



 Fair Value of Warrants Issued for Consulting Fees 

$      208,663


$                       -



 Preferred Dividend Receivable 

$      246,576


$         249,316

 

SOURCE Dakota Plains Holdings, Inc.



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